RDWR. Bought RDWR today. Coming out of a stage 1 consolidation on high volume. Set my stop. RDWR has been around for a long time but I like the area it is in. Computer-networking. I also like the low volume before the breakout forming a VCP pattern.
ZS, Coming out on nice volume of a cup like base. The buy point would be $202.64. I want to be clear, I am not telling anyone what to buy. I only buy the stocks where I said I have bought them. So, It’s good to discuss stocks but if anyone buys them it is on you. You have to take responsibility for what you do and not for what someone else does. So with that being said Let’s talk ZS.
It has an EPS rating of 99, It’s distribution is A- but look at it’s RS line is only 35. With IBD that would be a definite no, no. But, I think you have to look further into the stock. The RS line is heading up as it went up the right side of the base. William O’neill would say that it is to far off the high and the rs line is to low. But would he? Let’s look further.
It has good fund ownership.
Now look at the 3 month and 6 month RS rating. They are at 90 and 81. SO the RS is moving up in the short term. The RS line on the IBD charts are calculated over a 12 month period. So you have to be aware of that in the short term.
Now look at that, the composite rating is at 81 and that green line is the earnings line and it is going straight up. The volume though has come down since I started talking to 41 percent.
So what I am trying to tell everyone is looking and choosing a stock is very conditional. There are a lot of moving parts and not everyone of them are going to be right. You can follow someone else’s rules or make up your own rules that are an amalgamation of different people’s rules. The more you learn the more you will evolve. It doesn’t matter how you invest what matters the most is that you follow your own rules.
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Now I would like to talk about Risk.
People do not understand risk very well. They are looking at the upside but not the downside. There was a very smart investor, that used to post a lot, but has slowed down. He lost a lot of money in the last down turn and was trying to make it back. To me, he looked like he was doing an astounding job. He really knows how to make money but I am not sure if he knew how to limit risk. He went on a board and told everyone, because he was always completely honest in what he was doing, that he had 3 stocks and around 2 million dollars in them. One of the board members told him that he shouldn’t be posting because that wasn’t a portfolio. I thought to myself, and I should have posted, that board member was a complete newby. Had no clue what he was talking about. What he should have said is How are you managing your risk. So let’s talk about that.
So let’s say you have a portfolio of $100,000 dollars. We do what that guy did and buy 3 stocks. So we have about 33,000 dollars in each stock. Gasp you are risking 33 percent of your portfolio on each stock but that isn’t correct.
We put a stop on each of those 33 percent positions at 5 percent. So in reality We are only risking 1.65% of the portfolio on each position. So that is one way to limit risk. Of course there are variation of that considering the position size and the percent for the stop. So we could take a 10 percent position with a 10 percent stop if the stock was more volatile. I like to keep my risk at about 1 percent for each position.
If you are a value investor that buys and holds forever you need to think about that. Because you are going to hold each position no matter what. If that is the case you are risking your whole position. Is it likely to go to 0 , no, but is it likely to lose 70 or 80 percent? yes. So if you are a value investor you have to be very careful in the companies you invest in and the size of your position.
$CRWD is steadily making back the plunge from that (hopefully) one-time bug that crashed tons of systems and businesses. Some value people I respect on CNBC were buying it for the first time for their clients. They recently, and once again, were the top company in their cohort of their Gartner Magic Quadrant. It has been making higher highs and higher lows. It is now above 200dma and in a good place for a swing trader to buy, with an obvious stop below the 200dma. I have been adding to my MF core positions since near the bottom. They may have some one-time discounts that impact next earnings. This is the best cybersecurity stock and with AI there are only going to be more attacks. The Gov requires 4-day reporting by companies that get attacked, you have to have a good product to make that window. I feel this is still a great long-term company. 30% increase if it makes it to old highs.
I have also always liked $ZS and have some old positions with very nice gains (thank you Motley Fool). Andy’s analysis if ZS is very good. If I could only buy one, I would buy $CRWD, but $ZS is very good. It too is moving above the 200dma and a candidate for a swing trade. Very nice Earnings line on the weekly, but last EPS caused the line to “bend down” a bit, which caused the stock to have that big drop (probably mostly on outlook, but I forget).
Whether you see ZS as a cup or as a double bottom, the buy point would be the same.
In IBD terms, ZS in not a buy and not in a stage 1 base. It has had 3 good days up, but RS is 35. Bill would never look at that. Note that you can get a Stage 1 base after
a long run with multiple base. This happens if the price goes below the low of the prior base, which resets the base count.
$RDWR is a very good example of an IBD buy vs ZS
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I was stopped out of BITB yesterday. Crypto has been hard, But look at MSTR.
I bought MSTR as it was coming out of a stage 3 consolidation. I am back completely invested.
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Bought $UBER, future brighter with TSLA robotaxi presentation flop. Clearly lots of institutional money buying it up with +325% volume on gap up into then above the buy zone. I was watching at 9:30, but wanted to wait a few minutes to see the trading trend. That cost me a percent or 2 but still got it around 3% into buy zone. Sold $WING to buy so only have 1/2 position of funds to use in that particular account. Stage 4 base, so more risky, but this seems like a big change in character and prospects for this stock.
Added 1/6 position to $VIK
$WING: lost about 6.63% got 3% back in UBER today. It was just performing poorly in a strong market. It did find support at the 50dma, but I am done with it. SHAK broke out, but then failed today. CAVA holding up well.
Update: 10/12/24…
In regards to $UBER: Lesson Learned: I was watching at the open and didn’t want to rush in, wanted it to prove itself. But in retrospect, I should have started with a 1/6 position immediately then added after it proved itself. Risk would have been low, and I could have still held that if it stopped going up.
Update 10/13/24: UBER: Webby missed it and now is waiting for spot to get in. Too extended for swing trade and most position trades. Look for consolidation or upside reversal (see SN, AXON). If you are in it, today’s low should be a sell point.
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$GLW has an interesting pattern after breakout…
$ARM moving above buy zone.
$NVDA close to a breakout
$VERX buyable after post-breakout consolidation. I already own some.
My $VIK is consolidating in the buy zone.
$UBER may give opportunity after huge gap up.
Stocks on my watch list with strong ratings
$PAY moving toward buy zone, but the buy point was the pop off the 50dma the other day.
$COOP look buyable.
$TYL looks similar to $COOP
$IBP getting close to a breakout
$AVGO
$LLY could be a swing trad with support at the 50dma
Can someone tell me why I sold this?
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Sold $CRS. 1.8% profit. Doing nothing while market goes up. Earnings in 12 days and no profit margin. It will go up 10% on earnings 
Might buy some NVDA, TDG or wait for something better.
I want to love ONON, but it is now below 21dma. Maybe I will want to sell that at end of day.
Update 10/14 4PM: I did add 1/6 to NVDA. I have earlier positions with strong gains to protect my pre-breakout buy. Just seems like Jenson Huang is really optimistic with the demand he sees that is “insane”. Also added 1/6 to VERX. It got near 21dma two days ago and is now back in buy zone. Thought about $GLW, I like the cup/handle pattern and short consolidation after very strong break out. $ONON was falling below 21dma, but finish about even so I held off on the sell. Considered selling 1/2, but did not even do that. I would probably use the cash for GLW if I were to pull the trigger right now. Still watching $VIK for an add point.
Note that TDG went ex-dividend on a $75/share special divided (that accounts for the gap down). That means it is really well above the buy zone, not in the buy zone like the chart makes it seem.
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On Monday, the large-cap S&P 500 also posted an all-time high of 5871, extending its year-to-date gain to 23%
Dang it, my IBD account is only up 22%. I still can’t beat the S&P with all this work.
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$TXRH breaking out on high volume. It is early, so vol can be deceptive. Technically it broke out recently, but then slumped. Today’s move takes it back into the buy zone, off 21dma support, and above old high from first breakout attempt.
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Sold 50% of ONON because it is falling farther below the 21dma, could buy back if it bounces off 50dma later. I am trying to improve my game at selling correctly. But, NVDA is trying to breakout, so might use the money for that. IBKR fell after earnings, but is bouncing back nicely, might add to that. VIK just above buy zone, could add a small a mount on a minor dip. MOD is breaking above a recent consolidation “shelf” above buy zone, might add a little to that. UBER trying to fill the gap after poor TSLA robotaxi news, I might add if it holds that high of the day before the gap. UBER is my poorest IBD holding right now, others looking as strong as the market.
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Andy’s ROAD jumped 13% today on huge volume. Not sure why, but if it consolidates a bit then moves above today’s high it could be an add point.
Andy’s APP is a beautiful thing. This triggered the 8 week hold rule to see if it could become a big winner. That has paid off with a continual creep up and then a 9% gain today on 35% above avg volume. Nice!
Some notes on some of my holdings…
○ Interest rate sensitive stocks took a hit
○ NVDA breakout out, but on low vol.|
○ GVA up on strong vol|
○ ONON reverses off 50dma. First test since breakout, which is a typical add-on point for IBD Position traders. Look at what MELI did on its first post-breakout test of 50dma.|
○ VIK back in buy zone - opportunity to add|
○ MOD, testing 21dma after failing to close above a small consolidation
I sold WING because it was acting poorly in a strong market. It was testing the 50dma. Now it is below 50dma and touching the 200dma
Others
OKLO is the hot momo stock of the week. Too late for me to touch it.
GOLD and Silver stocks strong: AEM, HMY, SA, WPM.
GLW had a strong breakout and has now consolidated. Ready for a buy.
VSEC consolidating in a flag-like manner after strong breakout day. Not great IBD ratings though.
No IBD moves for Pete today.
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Sold $GE as it plummeted on bad earnings. Lost about 8.65% on a 1/2 position. It finished at bottom of range and below 50dma.
Sold $TDG, also an aerospace parts provider like GE. It got dragged down and I worry there is a change in the group. Madea small profit of less than 3%. It finished below 50dma and was also a 1/2 position.
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ALAB came out of a consolidation “like” pattern on really nice volume. This one has been doing well. Nice EPS Rating, Comp rating of 90, RS rating climbing. This is a classic IPO play. I added to my position as it broke above $70.74.
I was stopped out of Fix today at $358.43. I made 8.12% in 45 days. That is a little underperforming but if you were to take that to a year it would be around 65% a year so that doesn’t seem so bad. Looking at Fix it has great numbers. EPS rating of 90, composite rating of 99, It meets all the criteria with flying colors. Everything but one. Look at the volume. Very underwhelming. It is around 500,000 a day. My big winners trade around 2 million a day. I think that points to why Fix isn’t just hitting it out of the park. The big funds have a hard time getting a nice position in a company trading on such low volume.
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Nice job on ALAB. It was featured in the video last night and they pointed out the recent strong volume on up days.
$ONON found support at the 50dma and bounced nice on results from $DECK. I will probably buy back the partial position I sold since it is first rebound from 50dma after breakout. I went to the Dr yesterday, one nurse was wearing ONON the other HOKA (Deckers). DECK can be bought now breaking above some longer term resistance.
$MOD is coming of first test of 50dma after breakout, but no vol, so I probably won’t add.
I bought $VKTX yesterday on very strong breakout after news on its GLP-1 drug. Had a second order in for lower but it never hit. I will have to add some higher after lunch today. This is not a IBD trade because it is not in a recognized base, but it is breaking above some good resistance. Huge potential if their “4-way” approach proves better than LLY, NOV drugs.
$TXRH making a strong move, too high in buy zone, but bodes well for $CAVA which keeps creeping up.
I sold TDG and GE recently, that is not making me feel bad for a change
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Thanks Pete, I would have never bought it if I hadn’t read the Lifecycle trade. IPO’s are a little tricky though because so many fail.
What is your thoughts on Volume Pete? I have noticed a lot of hot stocks do not have all that much volume but the book Trade like an Oneill disciple says a minimum of 350,000 per day and prefer millions per day. I think millions per day might be elite stocks but even Wing does not trade that much per day. I am still trying to decide if I want to have a cut off because a lot of it seems arbitrary.
The IBD dogma on volume is that a stock needs to be liquid enough to let you get out without a big spread or without moving the stock. If you are investing a million per position, that really matters. If you are investing $50k per position, that is less important. But I would still be reluctant to get in on really low vol stock. After all, you want the institutions to support your stock. That is the theory behind breakouts and buying your full position in days while institutions take weeks and months. They can’t invest in low vol stocks.
What would you consider low volume?
I went to a virtual IBD meetup yesterday and they said the minimum volume should be around 20 million dollars a day for a company that you are invested in. I have been looking at this wrong. So let’s look at LOAR. I do not have a position in it yet. It is right at the edge of the buy point.
i
So Loar has an average daily volume of 229,200 x 84.58 = $19,385,736 million daily dollar volume.
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Normally, I would buy $SHAK here, but earnings are in two days, so I should not. Nice volume on this breakout. $CAVA still keeps hiking up the hill step by step, so happy holding that. $TXRH was a hard breakout to buy, it just eased passed pivot in low volume. Then finally shot up off the 21dma and is out of buy range. Given the strength of these 3 stocks, SHAK might be worth a gamble.
I wrote myself a note this weekend to take profits in MOD because FIX and CARR did so poorly and all are in the same group: #38 Bldg AC and Heating. MOD is a little more diversified with refrigeration and auto exposure. Today my $AAON reported (same group) and jumped 9%. I have a 13% profit margin in MOD, so now I am pretty certain I will hold. Also, FIX, CARR, TT have bounced off their post earnings lows. Just thinking out loud.
I am adding a bit more (adding back) to $ONON. It jumped off the 21dma Friday after Deckers beat earnings (I think for 12th quarter in a row). I went for my annual dermatology check the other day, most of staff was wearing ONON or HOKA. HOKA is a little more funky looking, and ONON is a little more stylish, both very comfy, and I know ONON is great for runners.
On the Friday video, Webby highlighted $TSM. I have been buying it on the IBD breakout in small amount around my Motley Fool core position, so I have not been reporting on it here and won’t. But, Friday it broke above a downtrend and Webby put on a swing trade and said he would add more above Friday’s high, but would sell if it went below Wednesday’s low. I had on a stop-limit buy order for $205.23, but it fell before hours on news of a “illegal” chip found in a Huawei phone. So the limit did not hit and I cancelled it.
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